As coal industry declines, what will happen to all those retired miners?

March 7, 2013

The U.S. coal industry has been struggling in recent years. Mining companies are getting crushed by rising costs, new pollution rules and competition from cheap natural gas. Mass layoffs are ticked up of late.


On the wane. (The Washington Post)

But there's another aspect to the decline of coal that's getting less attention — namely, what will happen to the hundreds of thousands of currently retired coal miners who still rely on these companies for pensions and health benefits? Many of these retirees, after all, have crippling ailments after years of working in the mines. And many of the union benefits they've amassed over the decades are now at risk of vanishing.

There are a few big issues here: First, the United Mineworkers of America's pension plan, which was established in 1974 and covers more than 100,000 retired miners, is seriously underfunded. That's partly because of losses from the recent financial crisis and partly because contributions are dwindling — as time passes, there are fewer and fewer mining companies left to chip in to the multi-employer plan.

Second, a controversial bankruptcy case is putting thousands of retirees' health benefits at risk. Back in 2007 and 2008, two of the largest U.S. mining companies, Peabody Energy and Arch Coal, spun off the majority of their unionized mines and retirees into a brand-new company, Patriot Coal. A few years later, Patriot fell victim to plummeting coal prices and declared bankruptcy. Some 12,000 retired miners and their dependents now face the loss of some or all of their health benefits.

On the latter front, the United Mineworkers of America is pushing to preserve some of those retiree benefits in the Patriot bankruptcy talks. The union has also argued that Peabody and Arch should take more responsibility for their former workers, many of whom never worked a day for Patriot. (Both Alec MacGillis and Mike Elk have written longer accounts of this fight.)

Meanwhile, some members of Congress are looking for a legislative solution. On Wednesday, Sen. Jay Rockefeller (D-W.Va.) and three other Democrats introduced a bill to address both problems. Their bill would shore up the union's 1974 pension plan by diverting money from the Abandoned Mine Land Fund, a program to clean up old mines. It would also fold the Patriot retirees into a 1992 health benefit plan for miners.

In a press conference, Rockefeller said he was moved to introduce the bill after meeting with families in West Virginia that were poised to lose their benefits. “Last month, I heard stories that absolutely broke my heart," he said. "Our coal miners work their entire lives, at risk of life and limb, to provide for their families and fuel our nation.”

When asked whether Rockefeller's bill would resolve the mineworker union's concerns over the Patriot bankruptcy, UMWA spokesman Phil Smith was cautious. "It's not clear to me whether it would completely resolve the problem, but it can sure make difference." The bill also wouldn't preclude the mine workers from continuing their lawsuit against Peabody and Arch.

Of course, it's not clear that the bill can pass. Similar legislation was introduced back in 2010 by Rep. Nick Rahall (D-W.Va.), but it never came up for a floor vote. During a House hearing, both the mine workers and the coal operators supported the bill, but an official from the Interior Department expressed concern (pdf) that shoring up the pension fund could end up costing the federal government more than expected.

Why is this such a big deal? One way to see is by reading through the hundreds of letters written by various retired mine workers poised to lose their benefits in the Patriot bankruptcy. Years of working in damp, dangerous coal mines have left many retirees with a staggering array of health problems, from bad backs to blackened lungs. And Medicare won't always cover their ailments — for one, some retirees are too young to qualify.

"If we were to lose our pension check and the health insurance it would be devastating,"  wrote Ronald Ball, 59, a retiree who could lose his benefits in the Patriot bankruptcy. "It would mean the loss of a third of our income and my wife would have no insurance at all." Ball had worked for 20 years in the Mountain Laurel mine in West Virginia before an accident left him with six damaged discs and extensive nerve damage in his back. He says he can no longer work and his wife had to quit her job to take care of him.

One retiree explained to me in an interview that unionized coal workers had always prized their health benefits above all else — precisely because they knew that mining was an exceptionally dangerous job. "Whenever we negotiated for contracts, there were lots of things we gave up to keep our medical," says former Peabody miner Bill Lemley, now 65 and at risk of losing his benefits in the Patriot bankruptcy.

Since the mid-1980s, plenty of industries — from steel to airlines — have seen companies go bankrupt and revamp their contracts with organized labor. Pensions and benefits often vanish as a result. That wave has recently started affecting the coal industry, which still has some 80,000 unionized workers and hundreds of thousands of retirees across the United States.

Related: The U.S. coal industry would face decline even without Obama's policies

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Ezra Klein · March 7, 2013